Archive - Apr 16, 2014 - Story

Mayor Bill de Blasio is the first New York City mayor to release his tax returns in 12 years, according to the WSJ. de Blasio earned $165,000 as public advocate last year and brought in an additional $52,000 in rent on a second home he owns in Park Slope, according to his 2013 tax returns. Mr. de Blasio’s effective tax rate was 8.3%.

Last month's industrial production beat was revised up dramatically to its biggest beat since 1998 - courtesy of the annual revision of the data series as noted below - which left this month showing fading growth. Perhaps more disappointingly was the 4th miss of the last 5 months for manufacturiung production. Capacity Utlization rose to an impressive 79.2% as "slack" in the un-job-producing economy is rapidly disappearing. This was also the highest capicty utilization print (once again courtesy of the annual data revision) since June 2008.

While both the Housing Starts and Permits data reported moments ago disappointed - and sorry, you can't blame it on weather this time - with both sets of data missing expectations (Starts 946K, Exp. 970K up from a revised 920K; Permits 990K, Exp. 1010K down from a revised 1014K), the real story was in the composition of single family vs multi-family, or rental units, which showed that the previously reported rental euphoria has well and truly fizzled after a dead cat bounce in last 2013 could not be sustained. And perhaps more importantly, the complete lack of any real bounce in single-family housing, which remains at levels seen in late 2012 for starts, and is now rolling over for permits, confirms that the so-called hosing recovery not only slipped right through the vast majority of normal people, but even Wall Street is finally pulling out as builders themselves realize.

Update: UKRAINE DEFENCE MINISTRY CONFIRMS THAT SIX ARMOURED PERSONEL CARRIERS SEIZED BY PRO-RUSSIAN FORCES ON WEDNESDAY... so, defected?

The latest development in the ongoing Ukraine escalation are reports that in the aftermath of yesterday's crackdown by Ukraine special forces against "separatists" in Krematorsk and other occupied eastern cities, in an operation which involved fighter jets and helicopters, that an armored column of military vehicles flying a Russian flag and carrying dozens of heavily armed fighters motored into the city of Slavyansk early Wednesday. The WSJ adds that "it wasn't immediately clear whether the men were Russian soldiers or local militants who had gotten their hands on military vehicles." Curiously a soldier on one said the unit was part of the 25th brigade of Ukraine's airborne forces that had switched sides and was joining the pro-Russian forces, but that couldn't be immediately confirmed."

The plague of resigning senior FX traders from bulge bracket banks continues. The oddly coincidental timing of these mass resignations - along with total radio silence over any reasons from the banks in question - and the spreading FX market 'rigging' probe is, we are sure, just conspiracy theorists run wild. As Bloomberg reports, Lloyds Banking Group’s global head of spot foreign exchange, Darren Coote, has resigned, according to three people with knowledge of the move.

As we noted earlier, yesterday's ramp and the continued push higher in futures overnight has been stoked by first Japan, then China, and then Europe headlines proclaiming the great news that economic data is bad enough for the central banks to come back to refill the punchbowl... The result, as the charts below show, is 'magical' as the S&P pushes back up to the crucial for confidence positive territory for 2014.

Moments ago Bank of America reported its Q1 earnings, and as expected, they were quite a mess, with the bank posting an actual loss of $0.05 on expectations of a $0.27 beat, which however - in the spirit of JPM - was the result of a $6 billion pretax charge related to various litigation items, which amounted to $0.40 per share. So Bank of America would like you, dear bank analysts, to do what you do to JPM every quarter with its recurring "non-recurring" litigation item, and please add it back. But what is worse is that Bank of America reported Net Interest Income of $10.1 billion, far below the expected $11 billion, and an amount that had nothing to do with legal fees, "one-time" charges and reserve releases. Why was this number so weak? Because not only does BofA's balance sheet continue to collapse, with its mortgage services portfolio crashing from $1.185 trillion to just $780 billion, but because BofA just reported the lowest NIM, or Net Interest Yield as it likes to call it, in history at 2.29%. So much for that NIM surge that everyone was expecting.

• Ukraine Says Russia Exporting ‘Terror’ Amid Eastern Push (BBG)
• Civil War Threat in Ukraine (Reuters)
• China Shoe Plant Strike Disrupts Output at Nike, Adidas Supplier (BBG)
• Mt Gox to liquidate (WSJ)
• Ex-Co-Op Bank Chairman Charged With Cocaine Possession (BBG)
• Goldman Sachs plans to jump-start stock-trading business (WSJ)
• Credit Suisse first-quarter profit falls as trading tumbles (Reuters)
• U.K. Unemployment Rate Falls to Five-Year Low (BBG)
• Lawmakers Back High-Frequency Trade Curbs in EU Markets Law (BBG)
• Yahoo's growth anemic as turnaround chugs along (Reuters)
• Spain ETF Grows as Rajoy Attracts Record U.S. Investments (BBG)

We summarized yesterday's both better and worse than expected Chinese GDP data as follows: "a substantial deterioration of the economy, one which was to be expected yet one which can be spun as either bullish thanks to the GDP "beat", and negatively if the purpose is to make a case for more PBOC stimulus." Sure enough here are the headlines that "explain" the latest overnight futures surge which has once again brought the S&P into the green on the year - a 40 point Spoo move in hours since yesterday's bottom when the Nikkei "leaked" Japan's economy is on the ropes :

• Stocks Rise on China Stimulus Speculation

Here one should of course add the comment that launched yesterday's rebound, namely the Japanese warning that its economy is about to contract, adding to calls for more BOJ stimulus, and finally this other Bloomberg headline:

• The Strengthening Case for ECB Easing

And there you have it - goodbye "fundamental" case; welcome back "central banks will once again bail everyone out" case. Hopefully today's news are absolutely abysmal to add "US economic contraction fear renew calls for untapering" to the list of headlines that should send the S&P to all time highs by the end of today.